He swindled more than 1,500 people and spent 22 months in prison for his crimes. So you might not consider Jordan Belfort a go-to guy for advice on protecting your money.
Yet the former stockbroker — made infamous in last year’s Martin Scorsese film, The Wolf of Wall Street — has intimate knowledge of how to scam investors and persuade even prudent people to part with their cash. “People are in denial of their own pains,” Belfort told a rapt audience recently at the 92nd Street Y, a cultural center in New York City. “Salespeople amplify that pain to get them to make a decision and feel better.”
Belfort, who ran penny-stock brokerage firm Stratton Oakmont, which was shut down for fraud in 1996, has been rehabilitating his image since leaving prison in 2006. He’s written two memoirs, including the book that formed the basis for the movie. He travels the world giving motivational lectures, with ticket prices ranging from $75 to $599. And he'll reportedly help write a Mad Men-style TV show about the excesses on Wall Street during the 1980s. The government requires Belfort to pay half his earnings to investors defrauded by Stratton Oakmont, until the restitution totals $110 million.
Belfort took the stage at the 92nd Street Y almost as if he were still in prison, with fellow panelists condemning him for past crimes and the debauched life of drugs and prostitutes recounted in the book and movie. “In many quarters, he’s very unpopular,” said former Manhattan district attorney Joel Seiddman, who introduced the program. Seiddman then cited a New York Post editorial calling Belfort an “unrepentant scam artist.” When Belfort finally got to speak, he said, “To sit here and listen to this when I’m not getting paid is pretty tough.”
A gift for salesmanship
The audience, however, quickly warmed to Belfort, a raucous storyteller whose gift for salesmanship is apparent even under interrogation. Panelist Kelly Evans, the CNBC anchor, pointed out that Belfort is still profiting from his criminal exploits, through sales of his books and the movie rights to Wolf of Wall Street. “You’re successfully selling that story right now,” she said.
“What, should I sell it unsuccessfully?” Belfort retorted, to laughter and applause from the crowd.
When asked if his remorse is genuine, Belfort answered, “Look, people want to believe in redemption in this world. They look at this and say, ‘He made all these mistakes and he turned himself around.’ It gives them hope.” More applause.
When asked if writing books and giving paid talks about his past life were part of some master plan, Belfort seemed incredulous: “It's the worst living in the world to make money writing books. If you thought I sat there and said I’m gonna write this bestseller so I’m gonna get rich, there are a million better ways to get rich.” More applause.
Belfort even turned the tables on Evans, who questioned the validity of his redemption saga. “Listen, we all make mistakes,” Belfort said. “Well, maybe you don’t.” More laughter.
Do your homework
The Scorsese film earned criticism for glorifying Belfort's antics while paying scant attention to victims, some bilked out of hundreds of thousands of dollars. Many still haven't been repaid. Belfort has downplayed the Stratton Oakmont fraud by arguing that many of the victims were "wealthy" individuals targeted because they were in a database of high-income people. As the New York Times and others have pointed out, few of the Stratton investors feel they're wealthy marks who can afford to lose thousands of dollars.
Today, Belfort is able to tap his expertise as a scammer to advise people how to protect themselves against bad investing ideas. First, he says, research everything on the Internet to make sure you don’t nibble on bad bait. “All the information you need to make an informed decision exists online,” he said. “Never accept information from somebody you don't impeccably trust.”
At his own firm, Belfort wooed unsuspecting investors by making them feel they were joining an exclusive group. “Are there natural human frailties we play off? Of course,” he said. He pointed out that jailed Ponzi schemer Bernard Madoff employed a similar strategy: “Madoff played off the whole thing of joining the club. You have to be special to join Bernie Madoff's club.”
For all his rough charm, Belfort may never quite redeem himself as effectively as fellow former convicts including financier Michael Milken, now a respected philanthropist, or Sam Antar, the former CFO of the Crazy Eddie’s electronics chain, who helps prosecutors and business leaders spot the kind of white-collar crimes he used to commit. Federal prosecutors say Belfort hasn’t turned over all the income he’s supposed to, a charge Belfort disputes. And Belfort still lives somewhat large, in a swank southern California pad that overlooks the Pacific Ocean. When a fellow panelist at the 92d Street Y pointed out that Belfort hardly lives like a monk, he answered, “Why should I?” The audience liked that retort, too.
Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.